The share price of Magic Software Enterprises Ltd. (Nasdaq: MGIC; TASE: MGIC) rose to ten year high on Friday, the day that Emblaze Ltd. (LSE: BLZ) notified the London Stock Exchange that it had completed the sale of its 49.2% stake in Formula Systems Ltd. (Nasdaq: FORTY; TASE: FORT), Magic's parent company, to Poland's Asseco Poland SA (WSE: ACP) for $139 million. Asseco will have to work very hard to justify the acquisition of Formula's portfolio, but Emblaze has already done some of the work, especially in the case of Magic Software.
Magic Software, which has been in business for 27 years, has benefited from investors' interest lately. Its share price has risen 272% since the beginning of the year, and rose 6.6% to $6.71 on Nasdaq on Friday, giving a market cap of $214 million. In Israeli terms, Magic is no longer a small-cap company, but a mid-sized one, and currently has the third best return of Israeli shares on Wall Street so far this year.
Magic Software develops solutions for integrating computer applications on different telecommunications, including Internet and mobile, platforms.
Until July, Magic's share price traded at around $2 on Nasdaq, and only began its rally in the summer. Most of the share's rally took place after the company published its financial report for the second quarter, and before the publication of its third quarter financials. One could say that it was a late bloomer among investors.
The rapid rally and current share price raised doubts about the share's ability ro rise further. The share is now traded at a profit multiple of 22, which is quite reasonable for similar software companies.
Magic's share price rose 7.6% by midday on the TASE today to NIS 24.45. Formula's share price fell 0.9% on Nasdaq on Friday to $16.65, giving a market cap of $222 million, and was flat on the TASE at NIS 60.90. Emblaze closed at ₤0.475 on Friday, giving a market cap of ₤53 million.
Published by Globes [online], Israel business news - www.globes-online.com - on November 28, 2010
© Copyright of Globes Publisher Itonut (1983) Ltd. 2010